REASSESSING THE MARKET INTEGRATION APPROACH TO AFRICAN INTEGRATION: EVIDENCE FROM THE ECOWAS FREE MOVEMENT PROTOCOL

Transcription

1 REASSESSING THE MARKET INTEGRATION APPROACH TO AFRICAN INTEGRATION: EVIDENCE FROM THE ECOWAS FREE MOVEMENT PROTOCOL African Economic Conference: Regional Integration in Africa October 28-30, 2013, Johannesburg, South Africa 0

2 Abstract This paper argues that there is a problem with emphasizing a market integration approach in building the African Economic Community (AEC). It highlights the challenges of market integration in Africa by examining issues surrounding the implementation and enforcement of the ECOWAS Protocol on Free Movement of Persons and Goods, Right of Residence and Establishment. The paper shows that although regional integration may be the silver bullet for African renaissance and development, excessive reliance on the market integration approach may be an exercise in futility. This is evident in the case of free trade regime in ECOWAS which is replete with problems. Therefore, a change in approach is necessary for real integration to occur. We argue that rather than forming building trading blocks, African integration will better be served through the development of industrial and agricultural capacities of member states. Introduction Economic Community of West African States (ECOWAS) is one of the designated pillars of the proposed African Economic Community (AEC). The AEC Treaty, which came into effect in 1991, envisaged the creation of the continental community based on existing and new regional economic communities in Africa. ECOWAS is one of the existing regional organizations that form part of the pillars of the AEC. Established in 1975 by 15 West African states, ECOWAS seeks to establish an economic space within West Africa for the realization of individual and collective socioeconomic development aspirations of the member states. 1 It is not surprising therefore, that one of the earlier decisions taken by the leadership of the organization was to remove of all forms of barriers separating their people, societies and economies. This was clearly stated in Article 2 of the founding Treaty of 1975 and Article 3 of the Revised Treaty of Free Movement of the ECOWAS citizens is recognized as a fundamental basis of Community building and a prerequisite for the harmonious development of the economic social and cultural activities of the people. To provide details on the modalities of the free movement policy, a Protocol on Free Movement of People and Goods was signed by the member state governments in May The protocol provided for certain special rights to be enjoyed by the community citizens: the right to entry into any of the member states without visa; the right of residence within certain agreed concessional terms and rules and; the right of establishment in any of the member states to fulfill ones economic 1 The founding member states are: Benin, Burkina Faso, Côte d Ivoire, Gambia, Ghana, Guinea, Guinea- Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone andtogo. Cape Verde joined as the sixteenth member in Mauritania withdrew in

3 aspirations. The rationale for the liberation of movement is based on the desire to accelerate and sustain the economic development of the member states and to create a homogenous society, leading to the unity, through the elimination of all forms of obstacles to free movement of goods, capital and people. The free movement policy is also based on the economic argument that establishing an enlarged market in the sub region would provides opportunities for economies of scale, as capital and people move across the union to take advantage of productive environment and conditions. Moreover, it would help the member states to form a common front against the negative effects of globalization. However, more than two decades after its establishment, the free movement regime is still fraught with implementation challenges. This paper highlights these challenges and argues that the emphasis on market integration strategy adopted for African integration is not adequate to bring about the kind of economic transformations that would encourage governments and the private businesses to fully participate in the ECOWAS free trade arrangement. It also shows that if the AEC is to become a reality, the focus of ECOWAS as one of the pillars of the AEC has to shift to the development of the supply-side (production aspect) of the integration, through industrialization and agriculture, rather than harping on free trade. In terms of methodology, the paper employs content and documentary analyses of ECOWAS instruments, reports and official documents of various researches on the ECOWAS free movement policy, as well as related media reports. An overview of the ECOWAS Instruments for Free Movement There are two major instruments that constitute the working document for the realization of free movement of people and goods. They are the Protocol on Free Movement of Persons, Right of Residence and Establishment, and the ECOWAS Trade Liberalization Scheme (ETLS). They are both established as a follow up action to the provisions of Articles 2 and 27 of the 1975 Treaty which call on member states to ensure by stages the abolition of the obstacles to free movement of persons, services and capital and to exempt Community citizens of member states from holding visitors visa and residence permits and allow them to work and undertake commercial and industrial activities within their territories (ECOWAS, 1975). Although the documents are well 2

4 prepared taking into consideration the peculiarities of the member states, yet they have not been faithfully implemented. The protocol on free movement spells out the various stages to be undergone to accomplish complete freedom of movement as envisaged in the Treaty provisions of the ECOWAS. It provides that the right of the Community citizens to enter, reside and establish in the territory of any member states was to be accomplished progressively in three phases within a maximum transitional period of fifteen (15) years. These phases are: PHASE I- Right of Entry and abolition of visa: the citizen of the community may enter into any other member states for ninety (90) days with a valid document and an international health certificate. No visa is required. Any citizen who wishes to stay for more than 90 days in a member state shall be required to obtain permission for extension of stay from the appropriate authorities in that member state. This phase of the protocol was envisaged to expire in five (5) years, from the definite entry into force of the protocol, after which the Commission on Trade, Customs, Immigration, Money and Payment, responsible for monitoring the implementation of the protocol, would make proposals to the Council of Ministers, based upon the experience gained from the implementation of the first phase, for further liberalization towards the subsequent phase of freedom of residence and establishment of persons within the Community. PHASE II- Right of Residence: upon expiration of the five year duration for the phase I, a supplementary protocol was signed on 1 st July 1986 at Abuja for the implementation of the second phase (Right of Residence). Right of Residence means the right of a citizen of the Community to reside in a member states other than his state of origin and even hold employment. Unless justified by reasons of public order, security, and health, a resident citizen can seek for and carry out income earning employment; travel for this purpose, freely in the territory of member states, reside in one of the member states in order to take up employment in accordance with the legislative and administrative provisions governing employment of national workers (ECOWAS, 1999). This provision therefore made provision for equal treatment of the resident Community citizen with that of national of the member state. 3

5 PHASE III- Right of Establishment: the right of establishment means the right granted to a citizen who is a national of the member state other than his state of origin, and to have access to economic activities, to carry out those activities as well as to set up and manage enterprises, and in particular companies, under the same conditions as defined by the legislation of the host member states for its own nationals (ECOWAS, 1999). This phase of the ECOWAS Protocol and Free Movement of Persons, Residence and Establishment provides for equal access, opportunity and treatment of Community citizens in matters of pursuit of economic benefit. States often guard their economies by setting limitations to access and opportunities for non nationals. The free movement of goods is another dimension of the market integration of ECOWAS. Therefore, the ECOWAS Trade Liberalization Scheme (ETLS) was launched in 1990, which clearly outlined methods of establishing market access for goods from the member countries. This is elaborated in the next section. ECOWAS Trade Liberalization Scheme (ETLS) and Free Movement of Goods The guarantee for free movement of goods within ECOWAS has been comprehensively dealt with within the framework of ETLS. The ETLS, like the protocol on free migration, also articulated some phases for the implementation of the free trade regime within the Community. Under the ETLS goods originating from the Community can be sold and, or bought in the enlarged ECOWAS market without discrimination or restrictions. The ETLS categorized goods benefiting from this treatment into three (3): unprocessed goods; traditional handicraft and; approved industrial goods. It is also outlined periods and rates of at which the member states would lower and eventually eliminate tariff and non tariff barriers to these category of goods. This was done in consideration of the difference in the level of development of the member states, and their capacity to absorb economic stress due to application of the scheme. The ETLS envisaged establishing progressively a customs union in the sub region over a period of fifteen (15) years, starting from January 1, 1990, the date of entry into force of the scheme. It was to follow a number of stages. Stage I- it was the consolidation of Customs duties and charges of equivalent effect and non tariff barriers. For two years the member states were not bound to reduce 4

6 or remove import duties, although it must not fix new duties and charges nor increase existing ones. Furthermore, non tariff barriers were not to be set up and those in existence were not to be increased. Stage II- this was the immediate liberalization of unprocessed goods and traditional handicrafts. Unprocessed goods are defined as animal, mineral and plant products which have not been processed. Traditional handicrafts referred to generally articles made by hand or without the aid of tools, instruments or gadgets activated directly or indirectly by the artisan. Stage III- this was the gradual liberalization of industrial products originating from member states. Industrial products of Community origin were initially subject to limited tariff lines based on elaborate categorization on specific country of origin, as shown the table below. Timelines within which tariffs had to be eliminated and rates of reduction of these tariffs, duties and other charges of equivalent effect were worked out for the different categories of the member states. Rate of Reduction of Customs Duties and Taxes Group of Countries Period within which tariffs Must be eliminated Rate of reduction of customs duties & taxes GROUP I Cape Verde, The Gambia, Guinea Bissau, Burkina Faso, Mauritania, Mali, Niger 10 years 10.0% reduced each year GROUP II Benin, Guinea, Liberia, Sierra 8 years 12.5% reduced each year Leone, Togo GROUP III Cote d Ivoire, Ghana, Nigeria, 6 years 16.6 % reduction each year Senegal Source: ECOWAS Briefs This was done in recognition of the differences that exist between the member states in terms of endowment, level of economic strength and development. Moreover, an elaborate mechanism was developed to determine origin of industrial products. In general industrial goods must carry substantial proportion of local/regional (ECOWAS) content and value added. This is to promote the development 5

7 and utilization of local resources and to avoid dumping of goods from outside the Community that have got a competitive edge over industries within the sub region. The aim is therefore to prepare ECOWAS sub regional industries to compete with others in the international community by first becoming regionally competitive. To facilitate the implementation of the free movement of goods scheme some supportive measures were put in place to mitigate the negative effects of liberalization. For example, a great number of the member states of ECOWAS rely on revenues generated from tariffs, duties and taxes on imports. By reducing and removing these charges their source of revenue would shrink. This can have serious negative effects on their budget and development plans. Hence, a protocol on compensation for revenue loss due to the application of the ETLS was promulgated by ECOWAS (ECOWAS, 2007). Furthermore, an inter-state road transit Situational Analysis on the Implementation Status of the Free Movement Regime The ECOWAS free movement regime has come a long way with a mix result. By January 2000, a Free Trade Area was, in principle, established in the ECOWAS region. This means that goods and services originating from the member states enjoy free access to the enlarged community market devoid of tariff and non tariff barriers or restrictions. Since, then however, there are challenges with consolidating the success and moving forward on that to have a Customs Union. Detailed and comprehensive as they may be, the protocols have been confronted by implementation challenges. The following sectionby-section analysis of the free movement provisions provides evidence in support of this conclusion. RIGHT OF ENTRY: The protocol by its original designed, as seen above, has been implemented in stages. Thus, the first stage, which is Right of Entry, entered into force on April 8, It was to be effective after five years to facilitate the entry into force of the other parts of the protocol, i.e. Right of Residence and Establishment. Since the coming into effect of this provision of the protocol, visa requirement for ECOWAS citizens has been abolished completely within the sub region; national immigration and emigration forms have been harmonized and ECOWAS Brown card for free vehicular movement has been introduced in all the member states except Liberia (ECOWAS Vanguard, 2013:5). This is not a mean achievement. ECOWAS citizens, who 6

8 wish to enter into any other member states, through the official entry points, which include the land borders, sea ports and air ports, are not required to seek, obtain and present visa. Such citizen is however, required to present a document to proof his identity as an ECOWAS citizen and an International health certificate to check his health status. Free movement therefore, does not mean undocumented entry into other member states. Hence, it is prohibited for any ECOWAS citizen to enter into another member state through illegal routes or without approved documentation. This documentation is necessary to check abuses of the protocol. For example, it is possible for non ECOWAS citizens to move within the community under the provision of the protocol. Crime and other illegal activities can also be checked through the process. Notwithstanding the achievements, the process of free movement is fraught with a lot of irregularities and problems. The major problem has to do with the implementation of the protocol by officials of national agencies, particularly the immigration and customs. Along the inter-state highways and at border posts, there are numerous officials and cumbersome procedures that hinder the smooth movement of the ECOWAS citizens. There are many reports by migrants and economic operators about their experience along the inter-state highways in ECOWAS and at the borders. Daygbor (2013) reported that migrating citizens within ECOWAS member states continue to experience routine intimidation and harassment by security officers along the common borders. 2 For instance, custom threats of arbitrary arrest and denial of passage if bribes are not paid are still common, even though the ECOWAS policy on a common passport for the entire sub-region has been in place since the early parts of 2005 (Daygbor, 2013). Daygbor recounted the difficult experience of Lorpu Kollie, a secretary general for an organization of local market women in Liberia, who sells African clothes produced in Guinea. Kollie says that there are rampant roadblocks and checkpoints that on average after every 30 minutes they are stopped by either immigration or police officers, who demand money from the driver and the passengers (Daygbor, 2013). The experience of Lorpu Kollie is not something new and has been replicated in many parts of the sub region. A report by Daily Observer, a Gambia Newspaper says that an ECOWAS Gender Development 2 a Liberian journalist currently participating in DW (German International Radio) Academic media training on regional integration focusing on AU and ECOWAS in Accra, Ghana 7

9 Centre study found that women traders and entrepreneurs engaged in cross border trade experienced several difficulties that not only undermine the potential of their activities, but also hamper the development of cross border trade and regional integration. The findings were revealed at a Conference on ECOWAS Trade Liberalization Scheme (ETLS) and Cross Border Trade held at Paradise Hotel in Banjul (Daily Observer, 2009). Another report by an online news network Afrique en Ligne says that the President ECOWAS Commission set up an eight member committee to examine the situation at the borders and highways in West Africa and to make recommendations concerning the application of the Protocol on Free Movement, Right of Residence and Establishment. The committee found that illegal road blocks and extortion of money as source of difficulty in crossing the border. The committee also found that joint border patrols formed to combat organized crime along the borders have turned themselves into extortionist trap for the travelers. At some of the borders the committee says that volunteers are recruited by some border officials to execute their racketeering work. It was also discovered that some borders operated for only 22 hours, whereas they were supposed to operate for 24 hours. This opened the door for criminal activities. In many instances, it was found that immigration officials of some member states have refused to recognize national identity cards as valid travel documents for the citizens of the Community to move freely within the ECOWAS sub region (Afrique en Ligne, 2008). Therefore, the right of entry in ECOWAS, though VISA free, is with some considerable stress particularly along the highways and land borders of the Community. RIGHT OF RESIDENCE: the second phase (right of residence) of the protocol on free movement of persons the right of residence, which was signed on July 9, 1986 at Abuja, entered into force on May 12, This phase of the protocol is generally not implemented by member states of ECOWAS. Community citizens wishing to reside in another member state require residence permit and other general conditions that apply to other non Community migrants. This is in spite of the fact that the mandatory residence permit has been abolished. In Ghana, for example, the right of residence is not implemented. There is a general requirement for all categories of applicants. All foreigners require work permit based on quota to qualify for residence (Ghana Immigration Service, 2013). Nigerians in Ghana have exhausted their quota under the 8

10 Ghanaian Immigration Policy. It is difficult for them to obtain residence permit or obtain extension. Hence, what some of them do is to go out of Ghana to Togo after every 3 months and then re-enter into the country in order to get another 90 days visa-free stay as provided under the Protocol on Free Movement of persons. This can be very inconveniencing to these community citizens. In Nigeria, also, to qualify for residence, a migrant is required to have Resident Card, which is valid for five years (Nigeria Immigration Service, 2013). ECOWAS Vanguard (2013) observed that different fees are charged by the ECOWAS member states for the acquisition of residence permit. This is shown in the table below: Country Annual fees for ECOWAS residence permit Benin 20,000 FCFA (USD $40) Burkina Faso Proof of payment of applicable residence tax plus 500 FCFA (USD $1) stamp Cape Verde 30,000 Cape Verdean Escudos (USD $314) Côte d Ivoire Although a 5-year ECOWAS residence permit could technically be obtained until recently at the cost of CFA 35,000 (USD $73), such permits were not issued in practice and will soon be officially abolished. Instead, renewable temporary stay documents allow all foreigners to remain in Cote d'ivoire for 6 months and cost FCFA 2000 (USD $4). The Gambia A residence permit B, granting the right of employment, costs 1300 Gambian Dalasi (USD $532) for ECOWAS citizens. The residence permit is valid from the date of issue until January 31 of the following year. Ghana 1,850,000 Cedi (about USD $200), The fee is waived for refugees (referred by UNHCR). Guinea FCFA 5,000 (USD $10) Guinea-Bissau FCFA 5,500 (USD $11) Liberia Mali Niger Nigeria Senegal 5500 Liberian Dollars (USD $95). The ECOWAS Residence Card is no longer in use. Instead, all non-nationals must obtain a Liberian residence permit booklet (USD $75) and registration form (USD $20). No legislation or regulations governing the acquisition of residence permits in Mali has been put in place. In the interim, citizens of ECOWAS countries need only ID to enter and stay in Mali. There is no charge. Other foreigners require long or shortstay visas. No legislation or regulations governing the acquisition of residence permits in Niger has been put in place. In the interim, citizens of ECOWAS countries need only ID to enter and stay in Mali. There is no charge. Other foreigners require long or shortstay visas. 25,000 Naira (USD $197) for Togolese citizens, 6,580 Naira (USD $52) for Ivorian citizens, 5,500 Naira (USD $43) for other ECOWAS citizens. The National Identity Card for Foreigners entitles residence and is valid for one year, renewable. Its cost varies according Proof of payment of applicable residence tax plus 500 FCFA (USD $1) stamp Source: ECOWAS Vanguard,

11 Lack of harmonization in the fees also opens up a space for violation of the right of residence. According to Frederick (2007) The Gambian authorities introduced taxes to limit the influx of migrants into the county and to raise money from the thousands of migrants residing in its territory. Residing in the country during the period were about 400, 000 Senegalese, 100, 000 Guineans and many Malians, Nigerians and Sierra Leoneans. The Gambian authority increased multiple the cost of acquiring alien cards from 50 dalasis (about 1.5 euros) to 1000 dalasis (i.e. 30 euros). It also tripled the cost of residence to 1500 dalasis (45 euros). Africans, including ECOWAS citizens, found it difficult to pay these taxes. Frederick reported that many of the migrants then preferred to leave the country than to live under that kind of control (Frederick, 2007). Still on the Gambia, the Gambia News reported in 2009 that The Gambian immigration officers demand traders from the sub region coming to the country to buy goods to show or take alien cards, despite the fact that they are within the 90 days stay approved under the ECOWAS protocol on free movement of persons (Gambia News, 2009). The violation of the ECOWAS protocol is, in part, due to lack of harmonization of residence fee to be charged by all the member states. There has not been any sanction for violation by the member states due to the fact that ECOWAS rely on political will and commitment of the member states. Reports of violation to the ECOWAS Commission are only followed up by calls on the member states to respect of the protocol. THE RIGHT OF ESTABLISHMENT: the third phase of the protocol was signed on May 29, 1990 at Banjul, and it entered into force on May 19, Implementing this phase of the protocol has also been problematic. There are reports of violation by some member states as a result of fear that aliens would take over their economy. In Ghana, for example, Nigerians are discouraged from establishing retail businesses. According to the Ghanaian authorities, Nigerians are taking over the retail businesses in their country, hence, the need to protect that sector for their nationals. Hence, in November 2007, the Ghana Investment Promotion Council (GIPC) imposed a levy of $30, 000 for Nigerian wishing to pursue retail business citing a GIPC Act of 1994 (Act 471), which says that the operations of non-ghanaian Traders is illegal. This is clearly in contravention of article 4, paragraph 1, which says that In matters of establishment and services, each member state shall undertake to accord non-discriminatory treatment to nationals and 10

12 companies of other member states (Supplementary Protocol A/SP.2/5/90 on the Implementation of the Third Phase [Right of Establishment]). Interestingly, at the summit of ECOWAS Heads of State and Government in 2000, Nigeria and Ghana were among the seven ECOWAS member states that signed up to a fast track approach to the economic integration of their economies (ECOWAS, 2000). 3 The fast track was to allow them move at a faster rate on the road to economic integration as other members lagged behind. However, more than a decade after Nigeria and Ghana are having issues with regards to right of establishment. In July 2012, Ghanaian authorities closed many shops belonging to Nigerians for operating illegally based on the GIPC Act. It took the intervention of the Federal Government of Nigeria and the ECOWAS Parliament for Ghana to suspend its action (Agande, 2012). This, as we will argue later, is because the Ghanaian traders are not prepared for competition for market with other ECOWAS traders. In the next section, we will show that even the trade aspect of the free movement is also replete with challenges. Implementation Status of ETLS and Free Movement of Goods The objective of ETLS is to remove tariff and non tariff barriers to trade for West African citizens and their businesses. The implementation process started in 1990 and by 2000 a free trade area was established in the ECOWAS zone. Like the free movement of people, consolidating the free trade regime in ECOWAS has been challenging. Tariff and non tariff barriers continue to hinder intra-ecowas trade. Since the application of the ECOWAS trade liberalization scheme, intra-ecowas trade has on average remained on 11 percent, in spite of the incentives (ECOWAS, 2012). This is shown in the table below, which shows the percentage of export and import of the member states in relation to the total value of trade. 3 The others were Togo, Benin, Burkina Faso, Niger and Mali 11

13 Intra-regional Trade of Member States ( ) Year Export in % of total value of exports Import in % of total value of imports Average Source: Member States, ECOWAS Commission Tariff barriers: Since the launching of the scheme in 1990, tariff barriers have significantly reduced. Unprocessed goods and traditional handicraft products, and a certain category of approved products can, in principle, be moved freely and sold within the sub regional market. Not paying tariffs and other duties has made it possible for enterprises in the member states to make some additional gains in their businesses. A random survey in 2008 showed that enterprises that registered under the ETLS had been making marginal gains that ranged form 0.1% to 45% depending on the type, demand and comparative advantage of the products they sold in the sub region. The effect of this has made more enterprises and products within the community to be registered under the scheme. From a total of 37 enterprises and 136 products in 1999, the list increased to 807 enterprises and 2536 products by 2007 (ECOWAS, 2007). The increase in number of goods benefitting from the scheme is an indication of increasing awareness of the benefits to economic operators. However, this achievement is hampered by non tariff obstacles. 12

14 Non tariff barriers: non tariff barriers constitute a huge obstacle to effective liberalization of trade in West Africa. These barriers include administrative, legal and physical obstacles to free flow of trade. Administrative obstacle include, among others, delay in the ratification of protocols relating to the application of the ETLS. For example, relevant protocols and conventions relating to the free trade regime, such as the protocols on Definition of the Concept of Products Originating from Member States of ECOWAS and Compensation for Loss of Revenue Incurred by ECOWAS Member States as a Result of the Trade Liberalization Scheme, have not entered into force as at October 2012 (ECOWAS, 2012). These protocols are important for facilitating trade and for encouraging the member states to implement the trade liberalization scheme. As a result, most member states do not insist on removing duties at their borders. Another related administrative problem is the cumbersome border documentation that traders and businesses have to go through at the borders. Different systems of custom documentation exist within the sub region. In some borders, numerous officials placed to monitor the movement of goods, which makes the documentation process cumbersome. At Seme border between Nigeria and Benin Republic, for example, several officials are posted to the border to monitor the flow of goods. These include not only customs, port health officials, National Drugs Law Enforcement Agents (NDLEA), Quarantine officials. Passing through these officials often cause unnecessary delays and hardships to economic operators and for the movement of goods. A 2010 report of GAP Analysis of ECOWAS Free Trade revealed that moving goods from Nigeria to Senegal attracts formal and informal fees that can reach 40% of the cost of the goods, on top of shipping costs. Companies listed on the ETLS Preferred Trader Program are still examined 100% of the time (USAID West Africa Trade Hub, 2010:12). The Abidjan-Lagos trade corridor is the busiest trade routes in ECOWAS. It is also known for its non tariff obstacles. ECOWAS traders have been suffering at the hands of border officials along that corridor. There are reports of extortion by customs officials. In 2011 alone, over 200 trucks, mostly belonging to Nigerian traders, were seized and detained for two months while transiting the Togo-Benin border of Hillacondji. The President of the Ghana-Togo Traders Association, the umbrella body for Nigerian traders operating along the Abidjan- Lagos corridor, Alhaja Rianatu Adenike Owokoniran reported heavy financial losses 13

15 incurred by their members as a result of inflation of transit duties and demurrage incurred from detention of their trucks. The secretary of the Association, Alhaji Ahmed Tunde Lawal reported that the charges were arbitrarily increased by the Beninoise customs from CFA 1.2 /2.5 million to CFA 4.5 million and then CFA 9.5 million per truck (Olusina, 2011). Lack of logistics has also contributed to inefficiency in the implementation of the protocol. Customs officials are forced to embark of physical inspection of goods, often in heavily loaded trucks, to check abuse of the protocol, and smuggling. Modern border facilities, such as scanners and automated system of custom administration, that can facilitate the inspection are lacking in most of the borders. Therefore, businesses experienced delays. This poor working environment also create room for corruption. At some of the borders touts, popularly called the Kelebes, are recruited by border officials to carry out inspection of goods. These touts, with the tacit approval or connivance of some border officials, often form rackets for extortion and bribery. They harass or lure traders into making illegal payment in order to have easy passage through the border. These touts in most cases control the barricades or gates at the borders, and receive instructions from the border officials. This form of illegal activity makes free movement of goods difficult. Furthermore, check points and road blocks, sometimes illegally mounted by national officials on the high ways, constitute huge obstacles to free movement of goods. Illegal tolls are collected from traders and businesses by these officials. Violation of the protocol results from this kind of corrupt practices by national security agencies. A finding by the ECOWAS Secretariat in 2000 showed the high frequency of checkpoints per kilometer along some of the West African highways. This is shown in the table below: 14

16 Frequency of Checkpoints on some Transport Routes Routes Distance No. of Checkpoints Frequency Lagos-Abidjan Niamey-Ouagadougou Lomé- Ouagadougou Cotonou-Niamey 1, Abidjan- Ouagadougou 1, Accra- Ouagadougou Source: ECOWAS, 2000 Most of these checkpoints still exist on these highways today. For example, between Badagry (Nigeria), a distance of about 50 kilometres and the border Seme, as many as 20 roadblocks are mounted by different officials: Immigration, Customs, Police, anti-smuggling units and local community revenue collectors. Recently, a Nigerian news agency, The Africa Portal, confirmed that the situation has not changed. The news agency reported that between Badagry (the exit point from Nigeria to Benin) and Noe (the entry point from Ghana to Cote d Ivoire), there are an estimated 120 border posts and security check points (Daygbor, 2013). Free movement of persons and goods are hampered by the activities of national officials. Many businessmen and women are forced to part with substantial sums of money as they settle their way through the roadblocks. This increases the cost for doing business within the ECOWAS region. From the foregoing, it is clear that integrating the ECOWAS market has been challenging. Although trade is made freer than what it was before the ECOWAS market integration programme, there are still some barriers to free movement of people and goods. The question is why has the ECOWAS free trade area remained ineffective more than ten years since it was launched? Why has the region remained plagued by poverty, unemployment despite the promise of improved living conditions due to market integration? In the next section, we will try to show that the emphasis on market integration rather than boosting production is to blame for the continued presence of obstacles and underdevelopment in the sub region. 15

17 Reviewing the Market Integration Approach After experimenting with market integration for decades, it is clear that trade is not the main key to the economic integration and development of ECOWAS. Therefore substituting trade with third countries and replacing it with trade between ECOWAS member states will not change the structural aspect of the economy that integration seeks to achieve. In the first place the supply side is undeveloped, which makes trade within the sub region unattractive. The types of goods that will search for a market in West Africa do not yet exist adequately. There is lack of complementarity in the goods being exchanged within the West African sub region. The major export commodities are raw materials which can only be transformed in industries. The industrial capacity of ECOWAS member states is inadequate to absorb these raw materials. Hence, the trading pattern and relations continues to show dependence on external market. Moghalu (2013) writes that available statistics put intra-regional trade at less than 12% and 10% for African and ECOWAS trade respectively, compared to other regional blocs such as European Union (EU) and Association of South East Asian Nations (ASEAN) whose intra-regional trade flows are respectively at 50%, 40% and 25. This shows that Africa and ECOWAS are more integrated with other countries and regions than they are within themselves. The emphasis on market integration therefore needs to be reviewed against the backdrop of the reality that only when industrial capacity exists in the sub region can trade relations improve. On the point of market integration in Africa Hartzenberg (2011) writes Integrating very small and poor economies still results in a relatively small regional market. It is true, however, that any market expansion will facilitate the achievement of some scale benefits, promoting a more competitive industrial development. The small regional market will still, however provide a constraint on economies of scale. Growth prospects will, therefore, depend to a large extent on whether firms can develop a competitive advantage in extra-regional markets. (Hartzenberg, 2011:12) The focus on border measures to promote trade in African integration therefore needs to be complemented by an equal programme for industrial capacity development. Industrialization is the salient aspect of the supply-side argument for integration. Most policy and academic analysis tend to focus on infrastructure and policy harmonization (Tanoe, 2013; USAID, 2010; UNCTD, 2009). In ECOWAS, there has been emphasis on 16

18 infrastructure, quality control and standardization as well, but with an eye on improving trade. Within the context of New Partnership for Africa s Development (NEPAD) implementation ECOWAS has received funding to support its transportation projects. In 2004, from the 9 th European Development Fund (EDF) on Regional Transport Facilitation Programme, ECOWAS received 82m euros (ECOWAS, 2004). The ECOWAS Transport programme includes construction of join border posts, creation of observatories along inter-state land corridors to expose and reduce the increase of bad practices; construction of West African Highway network (the trans-coastal and trans- Saharan routes). Air and Sea transportation have also received attention: promoting the creation of regional airline (ECOAIR) and regional shipping line (ECOMARINE) (ECOWAS, 2005). Although these projects are important in inducing demand and supply link within the ECOWAS integration project, the production aspect also deserve attention. Industrialization is a key dimension of supply-side of ECOWAS integration. Developing the capacity of local industries is sine qua non for improved trade within the ECOWAS region. Interestingly, ECOWAS has developed a regional industrialization policy: i.e the West African Common Industrial Policy (WACIP). But it has not been given adequate attention. The policy emphasizes harmonization of national industrial policies and promotion of partnerships and joint ventures with foreign investors; regional standardization and quality control and; promotion of partnership and capacity building (ECOWAS, 2004). However, to date the focus of ECOWAS has been mainly on policy: the establishment of West African Common Industrial Policy-WACIP, ECOWAS Quality Policy-ECOQUAL and ECOWAS Standards Harmonization Model-ECOSHAM (ECOWAS, 2012). There is not yet a concrete action on regional industrialization. To underscore the importance of industrialization, the President of the Manufacturers Association of Nigeria (MAN) at an ECOWAS Business Forum in 2007 opined that If ECOWAS is to move out of the present low level performance and free our sub-region from poverty, it is imperative that we must hasten the regional integration process to build and consolidate supply capacity before opening up our market to other regional blocks outside Africa. In the drive towards integration, ECOWAS Common Industrial Policy should be reviewed to form one of the building blocks for the 17

19 preparation of a new industrial master plan for the region (Borodo, 2007:3). Therefore, there is need to focus on establishing and strengthening of new and existing industries. A starting point may be the development of the small and medium scale industries (SMEs). Conclusion Market integration approach has yielded little dividend for the economic integration and development of Africa. The trade statistics have shown that only a small percent of the trade takes place within Africa. ECOWAS market integration policies are confronted with challenges of implementation especially from state authorities. The absence of transnational pressure has contributed in the persistence of the problems. By developing the regional industrial capacity and the private sector participation, it is possible to attain a critical mass of pressure on the states to eliminate the often government-abated obstacles to trade. Regional industrialization can therefore ensure that production lines and demand and supply chain are developed and strengthened across the sub region to be able to confront challenges posed by states inaction. As it is now trade is promoted without developing the supply side of goods and services. This renders the market integration counterproductive as trade space is established without tradeable products. A review of the market integration approach is therefore imperative. 18

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